County Supervisors Approve $13.7 Billion Budget Protecting Core Safety Net Services Despite Federal Funding Uncertainty

SANTA CLARA COUNTY, CALIF. — The Santa Clara County Board of Supervisors on Thursday approved a structurally balanced $13.7 billion budget for fiscal year 2025-26 that emphasizes critical safety-net services and strategic investments in local priorities at a time of unprecedented uncertainty regarding state and federal sources of funding, particularly for health care.
 
The budget takes a proactive and pragmatic approach to an extraordinary range of challenges, led by the massive cuts that Congress is considering for Medicaid, Medicare and food assistance programs, which are expected to impact millions of Americans. The Trump administration is also threatening federal grant funding to local governments for housing and other critical programs. Federal funding currently comprises nearly one-third of County revenues.
 
Meanwhile, the state of California is also considering major cuts to Medi-Cal, the state’s version of Medicaid. State cuts to Medi-Cal on top of federal cuts could severely impact the County’s public hospital system, which provides critical care to thousands of Santa Clara County residents and the broader region.
 
The budget for FY 2025-26 addresses these obstacles by prioritizing critical safety-net programs, particularly those that serve the most vulnerable; minimizing impacts on the County workforce, who are the dedicated public servants that deliver these programs; and protecting core services targeted by the federal government.
 
The budget also reflects the County’s continued focus on local priorities such as expanding behavioral health treatment services, maintaining critical funding for homelessness prevention, and continued funding for programs that serve the needs of communities under threat by the federal administration, including the immigrant and LGBTQ+ community.
 
“In developing the 2025-26 Adopted Budget, the County leaned more firmly than ever into its core values and the critical safety-net services it provides,” said Board of Supervisors President Otto Lee, who represents District 3. “I’m proud that, at a time of such great uncertainty, we are preserving the vital services we offer through our Health System and expanding access to life-saving care through the RMC acquisition. We are more committed than ever to helping the most vulnerable people in our community.”
 
On May 1, the County Executive released a Recommended Budget to the Board of the Supervisors, a process outlined in the County Charter. In crafting the Recommended Budget, the County administration assessed the potential for federal and state funding shortfalls, making budget planning recommendations to the Board that focused on opportunities to increase revenue, improving operational and organizational efficiencies, meeting legal requirements for service delivery, and redirecting funding to bolster vital safety-net services.
 
“Despite looming state and federal funding cuts to vital health care and social services programs, the Board of Supervisors’ adoption of the budget puts the County on a proactive, balanced path forward while preserving high-quality services and jobs across the County organization,” said County Executive James R. Williams. “The Board’s decision to act now to realign local General Fund dollars to backfill certain anticipated federal funding losses will help prevent greater impacts to critical services that so many in our community rely on. During these challenging times, it is important that we continue to make budget decisions on our own terms as a community while holding firm to the values that define us. Our County will continue to be strategic, proactive and thoughtful as we tackle the fiscal challenges ahead of us in order to preserve and protect the essential and lifesaving services that we provide our community.”

Williams also released a statement about the budget on the County News Center.
 
The Board’s Approved Budget takes the proactive step of replacing $59.6 million in federal funding for supportive housing, public health and behavioral health services with local sources of funding to prevent the federal administration from dictating cuts to those essential services or undermining the County’s ability to deliver those services in a manner that protects and cares for the most vulnerable in our community.
 
The FY 2025-26 budget does not yet account for the potentially devastating cuts to Medi-Cal that the federal and state governments are contemplating or the federal administration’s proposed cuts to a range of social services, such as Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP). It is likely that the Board of Supervisors will have to address those issues over the next fiscal year once the state budget and federal reconciliation processes are completed.
 
“The Adopted Budget is a reflection of our core values, that despite living in a time of incredible turbulence and uncertainty, the County is committed to protecting our most disadvantaged and underserved communities,” said Supervisor Sylvia Arenas, who represents District 1. “It is critical that we remain vigilant, nimble and steadfast in protecting the programs and services that benefit the people in our community, particularly in South County, who need them most.” 
 
“I want to thank our administration and staff for their work in producing the best possible budget in light of the tragic and cruel federal funding cuts that are targeting the most vulnerable populations in our community, including cuts to school lunches, senior care, and veterans’ services,” said Supervisor Betty Duong, who represents District 2.
 
“There were many difficult choices that had to be made that will impact essential programs and services that some of our most vulnerable depend on,” said Supervisor Suan Ellenberg, who represents District 4. “This is at a time when the safety-net services the County provides will be more important than ever in the year ahead, as we confront not only economic uncertainty but a federal administration that threatens our values and most vulnerable communities.”
 
“This budget displays the bold resourcefulness the County needed to adapt to an extremely difficult economic and political environment,” said Supervisor Margaret Abe-Koga, who represents District 5. “But we have a lot more work ahead, because there are big challenges looming. We need to build our fiscal resilience – searching for revenue streams to bolster reserves, working more efficiently, and being ready to contemplate hard decisions.” 
 
In raw dollars, the FY 2025-26 budget grew compared to the FY 2024-25 budget largely because of the County’s acquisition earlier this year of Regional Medical Center, which provides critical health care services to the East San Jose community. The County restored Level II Trauma services at the hospital and successfully transitioned more than a 1,000 medical staff to County employment as part of the acquisition.
 
County expenditures are rising faster than revenues due to inflation and tepid economic conditions, among other factors, leading to a structural funding gap. The FY 2025-26 budget closes this gap, but the County will need to reckon with a structural deficit again in the coming years, on top of addressing federal and state impacts.
 
Ezequiel Vega, the County’s budget director, said the County will need to remain prudent and cautious in months and years ahead.
 
“We have successfully balanced our budget, but the outlook for future costs and revenues show that a new budget deficit will emerge soon,” Vega said. “The federal government is actively cutting spending, including critical allocations to state and county governments. Furthermore, the state is grappling with its own budget deficit, and the governor has proposed balancing the state budget on the back of health care provided to vulnerable households, which represent a great risk to public health care systems.”

More information on the FY 2025-26 budget is available on the County’s budget and finance webpage. The County will publish the Fiscal Year 2025-26 Adopted Budget in the fall.

ABOUT THE COUNTY OF SANTA CLARA, CALIFORNIA  
The County of Santa Clara government serves a diverse, multicultural population of 1.9 million residents in Santa Clara County, making it more populous than 14 states in the United States. The County provides essential services to its residents, including public health protection, environmental stewardship, medical services through the County of Santa Clara Health System, child and adult protection services, homelessness prevention and solutions, roads, park services, libraries, emergency response to disasters, protection of minority communities and those under threat, access to a fair criminal justice system, and many other public benefits.
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Media Contacts: María Leticia Gómez/Aaron Kinney, Office of Communications and Public Affairs, (408) 299-5119, [email protected]